4:09pm: Second quarter could be worst than the first, says Edward Jones strategist
The Dow closed Wednesday up 80 points, 0.2%, at 33,483, while the Nasdaq Composite fell 129 points, 1.1%, to 11,997 and the S&P 500 slid 10 points, 0.3%, to 4,090. The small-cap Russell 2000 index lost 19 points, 1.1%, to 1,751.
The Nasdaq finished lower for the third session in a row as investors digested the latest ADP private payrolls report, which showed slowing job growth in March.
The path forward for markets is murky after what was a strong first quarter, said Angelo Kourkafas, an investment strategist at Edward Jones
“Directionally, I think the move higher made sense, but at the same time the course is not yet clear,” Kourkafas said. “We doubt the market will whistle through any potential economic slowdown and growth concerns, which we have seen over the past two days.”
Traders are beginning to take a look at shifting away from growth stocks and toward more defensive ones. One such stock is Johnson & Johnson, shares of which rose 4.5% after the company said Tuesday it would pay $8.9 billion over the next 25 years to settle claims that its talc products caused cancer. That, in turn, helped lift the Dow to a positive day.
3:05pm: Biotech firm jumps on positive trial data
Immunic stock popped 16% to $1.70 following positive new data from the maintenance phase of its phase 2b CALDOSE-1 trial of lead asset vidofludimus calcium (IMU-838) in patients with moderate-to-severe ulcerative colitis (UC).
The company said data from the maintenance phase of CALDOSE-1 showed a dose-linear increase in clinical remission as compared to the placebo at week 50. Moreover, an exploratory statistical analysis confirmed the 30 mg dose of vidofludimus calcium to be statistically superior in achieving clinical remission at week 50, with a 33.7% absolute improvement over placebo.
The company's lead development program, vidofludimus calcium (IMU-838), currently in phase 3 clinical trials for the treatment of multiple sclerosis, selectively inhibits activated immune cells and shows combined anti-inflammatory, anti-viral and neuroprotective effects.
1:30pm: Natura & Co down after Aesop sale
Shares in Natura & Co, the Brazilian personal care giant, fell following news of the sale of its luxury skincare brand Aesop to L’Oreal for US$2.5 billion.
Natura & Co shares were down 10% on Wednesday afternoon after getting a small bump earlier this week when the deal was first announced.
12.05pm: Private companies add fewer-than-expected jobs in March
US stocks were mixed in noon trading after the latest ADP private payrolls report showed slowing job growth in March.
At midday, the Dow gained 39 points to 33,441, while the S&P 500 16 points at 4,084 and the tech-heavy Nasdaq slipped 157 points to 11,969.
“It’s been a rangebound market really overall, and I think that’s where a lot of the frustration comes from for me and for many of us that are investing in the equity market here,” Fairlead Strategies founder Katie Stockton said.
Notable movers included shares of Johnson & Johnson, which gained more than 3% after the pharmaceutical company said it would pay $8.9 billion over the next 25 years to settle claims that its talc products caused cancer.
11:00am: AI stocks weaker after C3.ai warning
C3.ai were down another 15% on Wednesday after short-seller Kerrisdale Capital came after the firm with allegations of “serious accounting and disclosure issues” yesterday.
The allegation spooked other AI investors. Shares of data analytics firm BigBear.ai lost 7% and conversation intelligence company SoundHound AI was down 4%.
9:40am: Private payrolls miss expectations
US stocks opened mixed as recession fears have been reignited by a series of weaker-than-expected economic data this week.
Just after the market opened, the Dow Jones had added 50 points or 0.2% at 33,453 points, while the S&P 500 was down 7 points or 0.2% at 4,093 points and the Nasdaq was down 60 points or 0.5% at 12,068 points.
Gold continued to move higher toward its all-time high price of about US$2075, up 0.4% at US$2,045.60 just after the market opened.
On the data front, ADP private sector payrolls fell more than expected in March coming in at 145,000, far below the consensus analyst expectation of 200,000.
“The data adds to evidence that the labour market is starting to cool and comes ahead of Friday’s closely watched non-farm payroll report,” commented FOREX.com market analyst Fiona Cincotta.
However, Pantheon Macroeconomics senior US economist Kieran Clancy noted that the ADP employment report has been a poor guide to the initial official payroll estimate since the ADP rebuilt and relaunched its model back in August last year.
“The upshot is that the ADP number ought not to be taken seriously; our forecast for March payrolls—based on the contemporaneous Homebase data and the lagged NFIB hiring intentions index—is 250,000 though we expect payroll growth to slow markedly in the second quarter,” Clancy said.
8:40am: JPMorgan boss warns US banking crisis is far from over
JPMorgan Chase & Co (NYSE:JPM) chief executive Jamie Dimon has warned that the US banking crisis is far from over and it should be addressed by a reimagining of the regulatory process.
"Any crisis that damages Americans' trust in their banks damages all banks - a fact that was known even before this crisis. While it is true that this bank crisis 'benefited' larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd," Dimon said in his annual letter to the bank's shareholders on Tuesday.
“As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon said. “But importantly, recent events are nothing like what occurred during the 2008 global financial crisis,” he added.
6:30am: Fed's tricky position
Wall Street is likely to open lower after the first of three jobs reports out this week indicated the first sign of weakness in the US labour market, putting the Federal Reserve in a tricky position in its battle to return inflation to its targeted range, while concern about a potential recession has propelled the price of gold towards its all-time high.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.1% in Wednesday pre-market trading, while those for the broader S&P 500 index shed 0.2%, and contracts for the Nasdaq-100 were also 0.2% lower.
The Labor Department reported on Tuesday that US job openings slipped to 9.9 million in February, the fewest since May 2021. The DJIA and S&P 500 each finished lower for the first time in five sessions, with both declining 0.6% to 33,402 and 4,101 respectively, while the Nasdaq Composite lost 0.5% to 12,126.
Spot gold rallied above $2,000 an ounce to $2,024.89, its highest since March 2022, as the dollar weakened in response to the data. It was last trading at $2,025.53.
“Figures on job openings and factory orders are pointing towards a potential recession for the world’s largest economy, but the upside might be a pause in interest rates which would typically be a positive for stocks,” commented AJ Bell head of financial analysis Danni Hewson. “The concern is the Federal Reserve might have to sound the retreat before its war on inflation is truly done. This could leave us with the worst of all worlds – the dreaded stagflation where the economy is shrinking but prices are continuing to surge higher.”
Ahead of the all-important non-farm payrolls report on Friday, today’s release of the ADP National Employment Report is expected to reveal that an additional 200,000 private-sector jobs were created in March, down from 242,000 in February.
Also due out today, the ISM services index for March is expected to show a decline to 54.4 from 55.1 in February, noted ING strategist Francesco Pesole.
“Back in December, a one-off drop below 50 sparked recessionary panic and crippled the dollar. Now, the combination with yesterday’s decline in job openings could mean that even prints in the 52-53 area could have a similar effect, as markets see more than one high-frequency piece of data moving in the direction of economic slowdown,” he added.